The index measuring construction materials prices grew by 0.3 percent in March, a slower rate of increase than in February. The same index has increased by 1.6 percent since March 2013. Improving weather conditions are expected to get residential and nonresidential construction back on track, leading to moderate growth through the end of the year.

The Producer Price Index (PPI) for materials and components used in construction increased 0.3 percent from February to March on a seasonally adjusted basis, as the rate of growth slowed slightly from February's 0.4 percent advance. Residential and nonresidential construction input prices increased in March at a slightly slower rate than in February.

The index was 1.6 percent higher on a year-over-year not seasonally adjusted basis. Inputs with a large price increase included softwood and hardwood lumber, insulation materials and energy products, especially natural gas. Copper and brass mill shapes, steel mill products and ceramic tile were among items with large price decreases, according to a Bureau of Labor Statistics report.

Prices for raw materials used in construction or to produce products used in construction, which tend to be more volatile, rose 0.7 percent (SA) in March down slightly from a 0.8 percent increase in February. The index was 4.1 percent higher than in March 2013.

The index measuring inputs used in nonresidential construction slowed its advance in March, up 0.4 percent (NSA), following a 0.7 percent increase in February. The index was 1.0 percent higher than in March 2013. The index measuring residential construction inputs also rose more slowly in March, up 0.5 percent (NSA) after increasing 0.7 percent in February. The index was 1.5 percent higher than in March 2013.

Greater year-over-year price increases are largely a result of growth in lumber and gypsum prices, which have a bigger impact on single-family construction than on nonresidential construction.

Diesel fuel prices gave back some of February's 4.4 percent increase with a 1.3 percent decline in March, leaving prices down 1.0 percent from March 2013 and down 1.3 percent from March 2011.

Asphalt prices were another energy related product that saw a decline in March, down 1.2 percent after rising 3.5 percent in February. But they were up 5.9 percent from March 2013 and were up 14.3 percent from March 2011.

A moderate rebound in construction activity is likely due to improving weather conditions, and the outlook for construction is positive, with a forecast of slow but steady improvement throughout 2014 and a further pick up in 2015.